Market Orientation and the Spatial Variation of New Firm Formation: Evidence from China’s Manufacturing Sector

Authors: Jin Shi*, Zhejiang University of Technology
Topics: Economic Geography, Location Theory
Keywords: new firm formation, spatial variation, market orientation, negative binominal model, China
Session Type: Paper
Day: 4/6/2019
Start / End Time: 8:00 AM / 9:40 AM
Room: Hampton Room, Omni, East
Presentation File: No File Uploaded

The global crisis in 2008 witnessed the fall of the international market and the rise of China’s domestic market. New export and non-export firms differ considerably in terms of location choice owing to the striking contrast of market orientation. Based on the firm-level database in China’s manufacturing sector from 2003 to 2013, this paper builds a negative binominal model at prefectural city level to investigate factors of spatial variation of new export vs. non-export firms, highlighting the role of international and domestic market potential as well as the moderating effect of agglomeration economies. The research arrives at three conclusions. First, cities with large international market potential are conducive to new export firms whereas cities with large domestic market potential fosters new non-export firms. Second, localization economies facilitate the formation of new export firms, and reinforce the positive effect of international market potential. Third, related variety support the formation of new non-export firms, but its moderating effect on domestic market potential is insignificant.

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